New Delhi, the 8^th March, 2000

No. 33/1/98-DGAD.—Having regard to the Customs Tariff Act 1975 as amended in 1995 and the Customs Tariff (Identification, Assessment and Collection of Anti Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, thereof:

A PROCEDURE

I. The Procedure described below has been followed:

i) The Designated Authority (hereinafter also referred to as the Authority) notified preliminary findings vide notification dated the 28th September, 1999 and requested the interested parties to make their views known in writing within forty days from the date of its publication;

ii) The Authority forwarded a copy of the preliminary findings to the known interested arties who were requested to furnish their views, if any, on the preliminary findings within forty days of the date of the letter;

iii) The Authority also forwarded a copy of the preliminary findings to the Embassy of China PR, Singapore High Commission, Royal Thai Embassy in New Delhi and Trade Deptt of Hong Kong Special Administrative Region (HKSAR), Hong Kong, with a request that exporters and other interested parties may be advised to furnish their views on the preliminary findings.

iv) The Authority provided an opportunity to ail interested parties to present their views orally on 11th November, 1999. All parties presenting views orally were requested to file written submissions of the views expressed orally. The parties were advised to collect copies of the views expressed by the opposing parties and offer rebuttals, if any,

(v) The Authority made available the public file to all interested parties containing non- confidential version of all evidence submitted by various interested parties. All parties who made request for inspection, in writing, were allowed to inspect the public file;

(vi) Argument raised by the interested parties before announcing the preliminary findings, which have been brought out in the preliminary findings notified have not been repeated herein for sake of brevity. However, the arguments raised by the interested parties have been considered in the preliminary findings and/or these findings,

(vii) in accordance with Rule 16 of the Rules supra, the essential facts/basis considered for these findings were disclosed to known interested parties and comments received on the same have also been duly considered in these findings.

(viii) ****in this notification represents information furnished by an interested party on confidential basis and so considered by the Authority under the rules.

B. VIEWS OF THE PETITIONERS

2.1 They have argued that Designated Authority should ignore any response, which does not have complete information, and proceed on the basis of "best available information" upon which the petitioner has prepared its application. An inference drawn by the Authority must by law be adverse to the person withholding the information. Anything else. It is submitted, would be contrary to law and principles of natural justice.

2.2 China-Hong Kong Trading block: Petitioners have drawn attention to the preliminary findings that imports from China are de-minimus. They have pleaded that Authority must consider the Geopolitics realities in today's world Already the Authority has recognized the breakdown on barriers in Europe and has initiated cases against European Union as a whole. The position between China and Hong Kong is similar and it would serve the ends to justice if authority would consider exports from China and Hongkong as a whole and remove the artificial basis for application of the deminimus rule.

C. VIEWS EXPRESSED BY THE EXPORTERS, IMPORTERS AND INTERESTED PARTIES

3.1 Government of Hong Kong Social Administrative Region (HKSAR)

In their response to the preliminary findings they have stated that they could not find any conclusive evidence of either dumping or injury to the Indian domestic industry caused by imports from Hong Kong. As regards to dumping margin they had sought details of calculations of dumping margin. Also they would like to have the information in time series for the investigation period covering the market price, average selling price, average cost to make & sell and market share of Indian industry vis-à-vis Indian overseas suppliers with separate data on Hong Kong for the dumping allegation.

3.2 As regards to like product they have referred to Dow Chemicals submission that ESCR grade Polyester is different product in terms of technical specifications, vis-a-vis the product manufactured by domestic producers in India.

They have noted that the Preliminary Findings do not support evidence of material injury. Further a clear causal link between dumped imports from Hong Kong and any resulting material injury on the Indian industry appears to be not established.

3.3 They have submitted that Rule 12 of Anti-dumping Rules 1995 makes it incumbent upon the Authority to record all preliminary finding which will contain interalia, the margins or dumping established under full explanation for the reasons for the methodology use in the establishment and comparison of export price and normal value as well as the main reason leading to the determination.

3.4 They have stated that since Hongkong is a member of World Trade Organisation and China is yet to become a member of WTO, it would not be proper to combine the exports of the two countries as is stilt not bound by WTO Agreement on anti dumping.

3.5 In response to the disclosure statement they have pointed out the following as factual corrections that Dow Chemicals Pacific Ltd. (DCPL Hongkong) is not the manufacturer of Polystyrene. The legal entity producing Polystyrene in Hongkong is Dow Chemicals (HK) Ltd., which owns and operates the Polystyrene plant located at Tsing Yi in Hongkong. Further it has been stated that DCPL, Hongkong is a trader and M/s Dow Chemicals Int. Ltd, (DCIL), Mumbai: acts as an Indian indenting agent of DCPL, Hongkong.

3.6 M/s._Thai Petrochemical Industries Public Co. Ltd.. Bangkok

Exports to India during the post investigation period from the company have been maintained low. An Members of WTO Thailand and India need to be aware of the responsibility to observe the world commitment towards trade liberalization, Unjustified extra tariff barrier should therefore, be avoided.

3.7 All India Plastic Manufacturer’s Association (AIPMA), Bombay

They have furnished international prices of Polystyrene for GPPS and HIPS for the period of April 1999 to October 1999 i.e. post investigation period and requested for abolishing anti dumping duty on Polystyrene.

3.8 Polystyrene Producers Association (India)- Petitioners The petitioners have prayed that the Authority must ignore any response, which does not have complete information and proceed on the basis of "best available information" upon which petitioners have prepared its application. Any inference drawn by the Designated Authority must by law be adverse to the person wilt-holding the information. Anything else, it is submitted, would be contrary to the law and the principles of natural justice,

D. EXAMINATION BY THE AUTHORITY

4.1 As regards to argument raised by the petitioners, Rule 6 states that Authority may allow an interested party or its representatives to present the information relevant to the case, any time during the investigations.

4.2 As regards the China - Hong Kong Trading block, Authority noses that the domestic industry had petitioned alleging dumping on imported product as separate countries, in the meantime, the exporters have also submitted that Hongkong is a member of World Trade Organisation and China is yet to become a member of WTO. From the foregoing, Designated Authority treats the countries, namely, China and Hongkong as separate countries for this investigation

4.3 As regards Like Article, Designated Authority notes that M/s, Dow have long- term sales arrangements with some of the users like M/s. Electrolux, Voltas etc. in India and are supplying ESCR Grade Styrene 469 to them, This fact does not imply that the domestic industry in India is not producing the Like Article. Also Authority notes that no new evidence has been furnished as regards to technical specifications, process of manufacture etc. which differentiate ESCR grade Styron 469 from the like articles produced in India.

4.4 As regards to factual corrections that the legal entity producing Polystyrene in Hong Kong is M/s Dow Chemicals (HK) Ltd., and M/s Dow Chemicals Pacific Ltd. (DCPL) Hong Kong is a trading entity and not the manufacturer of Polystyrene, the Authority notes that on the basis of their response, the latter have already been treated as non-cooperative. M/s Dow Chemicals (HK) ltd., have not corresponded or given any information to date and therefore the Authority treats them also as a non-cooperative party in this case.

4.5 As regards to calculations of normal value in respect of M/s Dew, Authority notes that the exporter has furnished some sample invoice supposed to be true copies of invoice for sates effected in China PR. It also notes that the invoice does not contain complete detail of names and addresses of the purchaser to whom it is sold and evidently information on this account has been suppressed. There is no proof of payment received by them, provided to the Authority. No evidence with respect to freight, handling charges and insurance has been furnished with respect to domestic sales. In the circumstances, Authority disregards the information furnished by the exporter.

4.6 As regards to calculations of normal value and export price the Authority has adopted the best available information on record in accordance with the rules.

4.7 As regards to submission made by M/s. Thai Petro Chemical Industry, that the volumes of import are so small that they cannot cause injury to domestic industry of Polystyrene in India, Authority notes that the volume of import from Thailand is more than de-minimus during the period of investigation and the dumping margin in respect of the exporter is more than de- minimus- Further, the volume of imports from a particular exporter is not required to be more than de-minimus for the anti dumping investigation.

E. PRODUCT UNDER CONSIDERATION :

5. The product considered in the present investigations is Polystyrene. Polystyrene is a versatile thermoplastic resin available in wide range of formulations from general purpose crystal and impact grades to highly specialised resins. Polystyrene can be of various forms. However, crystal Polystyrene (popularly known as general purpose polystyrene or GPPS) and impact polystyrene (popularly known as high impact polystyrene or HIPS) are the subject matter of the present investigations, GPPS is a clear, amorphous polymer and finds application in food packaging, food service items, medical care products and packaging for audio cassettes, compact discs, and other consumer electronic media. HIPS makes use of polybutadiene elastomers for impact modifications and finds applications in toys, furniture, housewares, food packaging, food service, medical care products, appliances, building materials, consumer electronics, and packaging for electronic media. GPPS and HIPS are different types of Polystyrenes and are not substituted with each other. Polystyrene is classified under custom sub-heading 390319 of Schedule 1 of the Customs Tariff Act, 1975 and under 39031900 of the ITC. The description is, however, indicative only and is in no way binding on the scope of the present investigations.

F. LIKE ARTICLES

6.0 Views of Petitioners.

As regards to like article, they have stated that General Purpose Polystyrene (GPPS) which is clear granules primarily used for manufacture of articles such as Cassette covers etc. High impact polystyrene (HIPS) which is an opaque granule is used for manufacture of articles sue as TV casings etc. One of the grades of HIPS. ESCR-Environmental Stress Crack Resistant Polystyrene. This grade of HIPS product is capable of withstanding extreme temperature and as other features, which make it ideal for use in refrigerators. The petitioners have reiterated that all grades of HIPS and GPPS are manufactured and can be manufactured in India. There may be minor difference in chemical compose of each manufacturer based on proprietary formulae.

6.1 Views of Exporters:

M/s Dow Chemicals have stated that their product is different from that manufactured by the petitioners Dow Chemical is currently exporting only ESCR grade Styrene* 469 R to India. This special ESCR grade is resistant to chemicals contained .n insulation foam used in refrigerators and is accordingly much less likely to crack. The product of the petitioners does not match the said specifications.

6.2 Examination by the Authority:

With regard to the quality and technical specifications of the Polystyrene produced in India and polystyrene Imported from the subject countries, the Authority notes that none of the interested parties have brought out any quantified differences. The evidence presented by the interested parties that particular consume, does not prefer to use Polystyrene produced in India and rely on particular source of Import does not establish that the same is not technically or commercially substitutable with the polystyrene being exported from the subject countries. In fact M/s Dow has themselves admitted that the petitioner produces similar article in India but the product does not match the said specifications. In any even. the product under consideration and the product produced in India is no, required to be identical In all respects and in the absence of identical article, the Authority Is required to see whether there exists a close resemblance with another article.

6.3 In order to establish that the polystyrene produced by the domestic industry is a Like Article to the Polystyrene exported from China PR, Hong Kong, Singapore, and Thailand, characteristics such as physical characteristics (size, chemical , composition, raw material), manufacturing process and technology, functions and uses, product specifications, pricing, distribution and marketing and tariff classification of the goods have been considered, The goods produced by the domestic industry have been treated as like article to the goods exported from the subject countries within the meaning of the Rule 2(d).

G. DOMESTIC INDUSTRY

7.0 The petition has been filed by Polystyrene Producers' Association, Mumbai. The petition is supported by the three producers of Polystyrene in India, who are also members of the Association viz.M/s Supreme Petrochem Ltd. (SPL), M/s LG Polymers, M/s Rajasthan Polymers and Resins Ltd. (RPRL).There is no other producer of polystyrene in India. The petitioners satisfy the standing to file the case. M/s. Supreme Petrochem Ltd. LG Poiymers S.W. and Rajasthan Polymers and Resins Ltd.} account for total production of Polystyrene in India and, therefore, satisfy the definition of the domestic industry, in accordance with Rule 2(b) supra;

H. DUMPING

8.0 The Authority provided opportunity to the exporters from China PR, Hong Kong, Singapore and Thailand to furnish information relevant to the investigations and offer comments, if any, in accordance with the Section 9A(1)(c) of Indian Custom Tariff Act, 1995,

8.1 Petitioners have submitted that the Authority has levied duties which is evidently much lower than the dumping margin with the amendment to antidumping rules on 15th July, 1999. It is imperative that honorable Designated Authority recognised this precipitous situation and impose duty to the fullest extent permissible under the law.

8.2 Government of Hong Kong Special Administrative Region(HKSAR), in their response to preliminary findings have stated that they could not find any evidence of either dumping or injury to the Indian domestic industry caused by imports from Hong Kong. Further, they have sought details of calculations of dumping margin.

8.3 M/s_Dow Chemical Pacific Ltd. (DPCL). Hong Kong: The exporters have furnished some sample invoices supposed to be true copies of invoices for the sales in China PR.

8.4 M/s_elf Atochem South Asia Pvt. Ltd., Singapore: The company furnished additional information with respect to normal value and export price. They have also submitted that FRPS grade Polystyrene to be excluded from the purview of the investigation as the same is not produced by domestic industry

8.5 Examination by the Authority

As regards the additional information furnished by M/s Dow Chemicals, Authority notes that the information is not spitted in the form and manner prescribed, and no useful analysis could be made out as the vital it information in the invoice furnished are blocked. Further, the transactions are for China and does not pertain to their domestic sale in Hong Kong. Hence, Authority is constrained to reject the information furnished.

8.5.1 As regards to Trade Department of HKSAR's request for detail calculations of dumping margins, the details of dumping margin which is confidential in nature, have already been furnished to M/s Dow through the disclosure statement on confidential basis.

8.6 As regards to information furnished by M/s Elf atochem , Singapore, Authority notes that the exporters have failed to establish comprehensive link between export price in exporting destination and consumer prices in India. Further, as regards to exclusion of FRPS grade Polystyrene the exporter has not furnished any evidence with respect to exports of subject goods to India during period of investigation. Since the exports have taken after the period of investigation, the exporter may prefer separate assessment. Hence, Authority is constrained to reject the claims made by the exporter

8.7 Authority also notes that there is no additional information or argument have been forwarded with regard to dumping from other exporters and interested parties,

8.8 In view of the foregoing and subject to above, the Authority confirms preliminary findings with regard to determination of dumping. The final dumping margins assessed are as under:

I. INJURY & CAUSAL LINK

9.0 Under Rule 11 supra, Annexure-II, when a finding of injury is arrived at, such finding shall involve determination of the injury to the domestic industry, ".......taking into account all relevant facts, including the volume of dumped imports, their effect on prices in the domestic market for like articles and the consequent effect of such imports on domestic producers of such articles....". In considering the effect of the dumped imports on prices, it is considered necessary to examine whether there has been a significant price undercutting by the dumped imports as compared with the price of the like article in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree.

Rule (iii) of the Annexure II to the Rules requires that in case imports of a product from more than one country are being simultaneously subjected to anti-dumping investigation, the Authority will cumulatively assess the effect of such imports. The such assessment can be, however, made only if it is determined that:

a) the margin of dumping in relation to the imports from each country is more than two percent expressed as percentage of export price and the volume of the imports from each country to three percent of the import of the like article in India, and

b) the cumulative assessment of the effect of imports is appropriate in light of the conditions of competition between the imported article and the like domestic article.

9. 1 In the present case, the dumping margin in respect of each exporter as also each country is more than the limits prescribed. Further, cumulative assessment of the effect of imports is appropriate in the light of the conditions of competition between the imported article and the like domestic article. The Authority has, therefore, cumulatively assessed the effects of these imports on the domestic industry.

9.2 For the examination of the impact of the imports on the domestic industry in India, the Authority may kindly consider both (a) volume of dumped imports and the effect of the dumped imports on prices in the domestic market for like article and (b) the consequent impact of these imports on domestic producers of such products. The Authority may, for the purpose of assessing the impact of the dumped imports on domestic producers, consider such indices having a bearing on the state of the industry as production, capacity utilization, sales quantum, stock, profitability, net safes realization, the magnitude and margin of dumping, etc. in accordance with Annexure II (iv)of the rules supra.

9.3 Volume and Market share Dumped imports:

With regard to volume effect as noted in the preliminary findings, it is observed that the market share of imports of polystyrene from China, Hongkong, Singapore and Thailand increased from 839 MT (1995-96) to 2637 MT during the period of investigation(annualised). The imports have increased significantly in absolute terms.

* This comprises of 69.96 % of Imports from Japan, Korea, Taiwan & Malaysia

( countries already investigated and anti dumping duties imposed )

It is observed that the volumes of imports are more than de-minimus in respect of subject countries except China.

9.4 As per the Rules, investigations against any country are required to be terminated if the volume of the dumped imports from the particular source are found to be below 3% of the total imports provided the cumulative imports from all those countries who individually account for less than 3%. are more than 7%. In view of the above provisions, the Authority decided to terminate the present investigations with reference to China PR as the volume of imports from that source during period of investigation was de-minimus.

9.5 The arguments with respect to injury have been made by various parties is briefly summarized as under:

9.6 View of the petitioners: They have submitted that Domestic Industry has suffered material and this material injury has been brought about by the dumping from the countries under investigation:

9.7 Petitioners have stated that the cost of Styrene Monomer is the basic factor that drives the cost of Polystyrene. The entire demand of Styrene Monomer of domestic industry is met through imports. Attention has been drawn to M/s, Dow Chemicals submission that their cost of Styrene monomer was a weighted average of US Dollar 370 per metric ton. This has been contradicted by their own submission later wherein Styrene monomer prices for the period of investigation ranged from US $ 370 to US $ 570 per metric ton.

Views of Exporters:

9.8 M/s_Dow_Chemicals :They have stated that imports have not had any volume or price effect on the market, The increase of imports over 1995-96 compared to POI is incorrect comparison because 1995-96 is for 12 months where as POI is for 18 months period. The domestic industry has not suffered material injury as their capacity utilisation has increased, domestic sales have increased, stock levels have decreased, sales realisation on average level has increased. These parameters indicate that the petitioners have not experienced material injury.

9.9 Exporters have alleged that the profitability of major producer, namely, M/s Supreme Industries has increased and it establishes beyond doubt that there is no injury to domestic industry due to imports.

9.10 Exporters have alleged that decline in raw material prices has resulted in fall in Polystyrene prices. Further, the domestic industry is already protected by duty protection. They have mentioned that Government of India has consistently maintained a significant duty differential of 20% between Import duty on Styrene monomers and Polystyrene, The duty on Styrene monomer was 10% during the period of investigation, as against 30% on the finished product Polystyrene.

9.11 The weighted average landed cost of their ESCR grade Polystyrene was higher than the domestic selling price of the local producers;

9.12 In view of the provisions of WTO Agreement, it was not permissible to make cumulative assessment of the injury analysis based on impact of exports from countries covered earlier anti-dumping case and present case without eliminating the impact of over lapping of period, wherein there was no anti-dumping duty during first 3 months of the present investigation;

9.13 Government of Hong Kong Special Administrative Region (HKSAR): They have argued that preliminary findings do not support evidence of market injury and establish clear causal link between imports from Hong Kong ;

1. M/s. Thai Petrochemical Industries Public Co. Ltd. Bangkok: They have stated that they sold only two consignments of Polystyrene totaling 144 tons during the period of investigation which could be considered a small portion compared to total Indian market demand of Polystyrene of 1,50,000 tons per year and this small portion would not justify to consider export of Polystyrene from the company is causing injury to domestic industry in India,

9.15 Examination by the Authority:

As regards to allegation that Authority has failed to distinguish between previous investigation with the present one, where in there was no anti dumping duty during the first 3 months of the current investigation, Authority notes that anti dumping investigation against countries viz, Japan. Korea Malaysia and Taiwan were completed and definitive duties have been imposed. While assessing injury to domestic industry in present case, Designated Authority is therefore not required to cumulate injury assessment from these sources, Further, the extent of injury from specific exporter is linked to non injurious price assessed for domestic industry and the landed price of subject goods.

9.16 As regards to comparison of imports of for 12 month period with the period of investigation which is for 18 months, it is clarified that the figures have been shown distinctly for 12 month and 6 months for the period of investigation (18 months) and where ever the comparison has been on yearly basis the period of investigation figures have been annualised appropriately.

9.17 As regards to the allegation that M/s Supreme Industry has made profits during the period of investigation and there is no injury to the domestic industry, it is clarified that the Authority has called for the costing information from ail the units forming part of domestic industry in the prescribed Proforma for the POI and for the three previous years. The actual cost of production of the subject goods for the domestic industry has been used to determine optimum cost of production on the basis of Generally Accepted Accounting Principle (GAAP). In the determination of Non Injurious Price (NIP) for the domestic industry, the Authority has made appropriate analysis of all the relevant factors including usage of raw material, the usage of utilities the actual expenses during the POI, the investments, the capacity utilisation etc to arrive at a NIP for domestic industry. The weighted average NIP for the domestic industry has been determined considering a reasonable profit margin on the capital employed by the petitioners.

9.18 As regards to M/s Thai Petrochemical claim that the volume of exports during the period of investigation is very small compared to the total demand of polystyrene in the Indian market, it is clarified that the anti dumping rules provide only for exclusion of the countries from the investigation where the volumes of import are de-minimus;

9.19 The various factors relating to injury to domestic industry have been discussed in the preliminary findings and the same is being considered for final determination.

9.20 The Authority thus observes that the domestic industry has suffered material injury.

J. CAUSAL LINK:

10.0 In establishing that the material injury to the domestic industry has been caused by the imports from the subject countries, the Authority holds that increase in imports from the subject countries at prices significantly below the non injurious price forced the domestic industry to keep its prices to unremunerative levels and prevented the domestic industry from recovering its fair selling price, resulting in financial losses to the domestic industry,

K. INDIAN INDUSTRY'S INTEREST & OTHER ISSUES

11.0 The purpose of anti dumping duties, in general, is to eliminate dumping which is causing injury to the domestic industry and to re-establish a situation of open and fair competition in the Indian market, which is in the general interest of the country.

11.1 It is recognised that the imposition of anti dumping duties might affect the price levels of the products manufactured using the subject goods and consequently might have some influence on relative competitiveness of these products. However, fair competition on the Indian market will not be reduced by the anti dumping measures, particularly if the levy of the anti dumping duty is restricted to an amount necessary to redress the injury to the domestic industry On the contrary, imposition of anti dumping measures would remove the unfair advantages gained by dumping practices, would prevent the decline of the domestic industry and help maintain availability of wider choice to the consumers of polystyrene. Imposition of anti dumping measures would not restrict imports from the subject countries in any way, and therefore, would not affect the availability of the product to the consumers.

11.2 To ascertain the extent of Anti-dumping duty necessary to remove the injury to the domestic industry, the Authority has relied upon reasonable selling price of Polystyrene in India for the domestic industry, by considering the optimum cost of production at optimum level of capacity utilization for the domestic industry.

M. LANDED VALUE:

12.0 The Sanded value have been determined on the basis of weighted average export price of polystyrene from China, Hong Kong, Singapore and Thailand after adding the prevailing level of customs duties and one percent landing and two percent handling charges.

N. CONCLUSIONS:

13.0 After considering the foregoing, Authority concludes that:

a) Polystyrene originating in or exported from Hong Kong, Singapore and Thailand has been exported to India below normal value, resulting in dumping;

b) The Indian Industry has suffered material injury;

c) The injury has been caused cumulatively by the imports from the subject country.

d) The volume of Imports from China PR during the period of investigation Is de-minimus and therefore the Authority does not, consider appropriate to recommend anti dumping duty with respect to Imports from China PR.

e) Authority, holds that the Imports from subject countries are causing injury to domestic industry in addition to Imports from countries viz. Korea, Japan, Taiwan and Malays. which are already attracting and dumping duties.

14.0 Authority considered to recommend the amount of anti-dumping duty equal to the margin of dumping or less, which If levied, would remove the injury to the domestic Industry, and the date of commencement of such duty (clause (d) Rule 4 supra as amended)

15. The Authority confirms the preliminary findings with regard to imposition of Anti dumping duty and recommend. Imposition of definitive anti- dumping duties, as set out below, from the date of notification to be issued In this regard by the Central Government, on all imports of Polystyrene originating in or exported from Hong Kong, Singapore and Thailand failing under chapter 39 of the Customs Tariff.

16.0 Landed value of imports for the purpose shall be the assessable value as determined by the customs under the Customs Act. 1962 including all duties of customs except Additional duty of Customs levied under Section 3 , 3A, 8B, 9 and 9A of the Customs Act, 1975.

17.0 Subject to above, the Authority confirms the preliminary findings dated 28.9.99

18.0 An appeal against this order shall lie to the Customs, Excise and Gold (control) Appellate Tribunal in accordance with the Act Supra.

RATHI V1NAY JHA
Designated Authority..